LARRY PESAVENTO is a forty-year veteran trader. He is theauthor of nine books on trading. Currently he is a private traderfor a large hedge fund.
SHANE SMOLENY is the pack leader and founder ofWolftrader.net, which is dedicated to nonstop market forecastingand analysis.
This chapter will provide a brief historical background on the concept of astrology. Then the basic concept of financial astrology will be introduced.
Key Concept Questions
- What is the purpose of this book?
- What is astrology?
- What is financial astrology?
- How is astrology like a clock?
- Why is it important to have a working knowledge of astrology to pursue financial astrology?
- Why is financial astrology easier to prove than personal astrology?
- How can astrology affect financial markets?
- What does financial astrology guarantee?
- Who were some popular early astrologers in America?
- How does Newton's second law apply to astrology?
■ Purpose of the Book
The purpose of this book is to introduce basics concepts of astrology and financial astrology to lay the framework for future applications. This book will be the first in a series to show a clear relationship between what's happening up in the sky with the planets and equity market behavior here on Earth.
So what exactly is astrology? Astrology is the study of the relationships between movements and interactions of the planets and human behavior. Financial astrology is the study of the link between the movements and interactions of the planets with market behavior. There are many different ways to look at financial astrology. But no matter how one looks at it, time and time again clear patterns emerge showing distinct market correlations to planetary behavior.
This book will begin by giving one a basic background on astronomy and astrology. Then the application to financial markets will be introduced. It is important to lay the foundation from both perspectives because some of the terms between astronomy and astrology are the same and some are different. So it is critical to clarify and distinguish the similarities and the differences between the two. This book is meant to be a beginner's guide and the focus will be on cycles between the Sun and the Moon. However, the groundwork will be laid for further editions and revisions of this book.
For those of one who are new to astrology, one can begin by thinking of the universe as a giant clock. A normal clock has just an hour hand, a minute hand, and a second hand. But an astrological clock has literally hundreds of hands spinning at different rates. When the hands of the clock line up at certain positions, then the time is right and the energies are aligned for specific actions. The alignment of planetary energy tends to provide a push or a force in one direction or another. Some of these energies are positive and some of these actions are negative. These energies affect the psyche of individuals and eventually human behavior.
It is important to note that astrology does not have every answer. It is one set of tools one can use to understand the universe and our place within it. The truth is that we don't know how or why astrology works. We just know that it does and we can measure its effects on financial markets. That is difficult for some people to accept.
Throughout the years, people have pursued links between external events and the market outcomes. In financial astrology, there are literally millions of permutations to pursue to find links between planets and market behavior. In the past and the present, there have been many studies that attempted to correlate planetary movements with market behavior. However, without a working knowledge of astrology it is very difficult to know how to set up the experiments. In other words, one is not even qualified to set up an experiment without knowing the traditional meaning of the planets, the signs, the houses, and the angles that they make with one another. By understanding the meanings of planets, angles, and signs, one can begin to set up a hypothesis to build experiments. At the very least, the so-called negative aspects should correlate with falling markets, and positive aspects should correlate with rising markets.
Of course, there are always surprise correlations between planetary behavior and market behavior when experiments are run over time. Statistical tests can be run around events to determine positive correlation, negative correlation, positive noncorrelation, or negative noncorrelation. These correlations and noncorrelations can then be pieced together and applied to artificial intelligence applications such as neural networks to predict market behavior. Proving astrology is actually much easier through financial markets because the statistical relationship to price data is clear and unbiased. In contrast, personal astrology is more difficult to pinpoint. In personal astrology, the meanings of the planets can take on many different interpretations. This depends on the context and the attitude of the individual involved. In many ways, financial astrology is a much better starting point to verify the meaning of planets and transits in regard to their effect on financial markets.
So how can astrology affect financial markets? The energy combinations of the planets affect humans, which in turn affects the mass social mood on the planets. If a large enough mass of people participate and interact to form a marketplace, then the planetary behavior can be used as a proxy to predict financial market behavior. Financial astrology does not guarantee that events will unfold. But it gives one a road map for likely outcomes. The goal is to obtain a statistical advantage obtained through a large sample size to increase our probability of success. For example, if we can get a 55 to 70 percent success rate in a neutral market with a high sample size, then we can gain an advantage over a market with 50 percent odds.
In financial astrology, outcomes and meanings of planets are often clear-cut even before any analysis is run. This is because people have been observing the planetary interactions and the links to human behavior for thousands of years. This energy of planets can be divided into positive and negative outcomes. This observation of key angles is how financial astrologers created accurate financial astrology forecasts and models before computers existed. Many of these models are still used today.
■ Brief Historical Background
In the late 1920s and early 1930s, financial astrology was made popular by astrologer Evangeline Adams. Adams was known as America's first big astrology superstar.She made astrology popular with her newsletter making stock market predictions. During the 1920s, Adams consulted many big financial names of the time, including banking giant J. P. Morgan. He was a big believer in financial astrology. The New York library of J. P. Morgan is full of information on astrology, and there is even a zodiac painted on the ceiling. A famous quote of Morgan's is Morgan famously said, "Millionaires don't use astrology, billionaires do!"
In 1947, Donald Bradley proposed the first financial astrology forecasting tool, known as the Bradley Barometer siderograph. This siderograph uses key astrological aspects and declination to forecast market turning points. It is not linked to market prices directly. The Bradley Barometer was created using key astrological aspects that were observed throughout the centuries. These aspects were grouped into positive and negative classifications. These classifications were then used to forecast markets. Negative aspects correlated with falling markets, while positive aspects correlated with rising markets. The important thing to note here is that this barometer was created before the arrival of computers to confirm the graph. This barometer is still used today in financial astrology. Today, with computers, these outcomes can then be plotted, tested, and correlated statistically.
■ Theory of Financial Astrology
Financial astrology begins with observing market behavior when two planets interact. However, financial astrology is not limited to that alone. One can also analyze the effects of multiple planets interacting. In physics, Newton's second law states that the sum of the forces equals the net force. In other words, on the outside an observer does not necessarily see all of the forces at work. What the observer sees is the net result of all the forces added up. The net force is what appears to the observer after everything is thrown together. In astrology, there may be different energies working together or against each other. The final result will be whatever wins the tug-of-war. What the observer sees at any given time in the markets is often the net result of all of the transits added up. However, single transits between two planets can be powerful, too. There are times when a singular transit is so powerful that it might dominate everything else around it. This is especially true when large planets are involved in the picture. Therefore, it can be said that all transits are not weighted the same. Some have more powerful effects on the markets than others. Some transits last for a long period of time and others last for a short period of time. So a transit for an outer, slow-moving transit such as Saturn will be much stronger and last much longer than a fast-moving transit from a faster-moving object such as the Moon.
In addition to the effects of transits on markets, there is also the topic of planetary cycles within the field of financial astrology. A financial astrology cycle can be broken down into two basic...